Android has won: now what?

by Glyn Moody

A broad alliance of leading technology and wireless companies today joined forces to announce the development of Android, the first truly open and comprehensive platform for mobile devices. Google Inc., T-Mobile, HTC, Qualcomm, Motorola and others have collaborated on the development of Android through the Open Handset Alliance, a multinational alliance of technology and mobile industry leaders.

This alliance shares a common goal of fostering innovation on mobile devices and giving consumers a far better user experience than much of what is available on today's mobile platforms. By providing developers a new level of openness that enables them to work more collaboratively, Android will accelerate the pace at which new and compelling mobile services are made available to consumers.

While some called the first Android phones "iPhone killers" other pundits saw its shaky beginnings, and claimed it would never beat Apple's ascendant iPhone. Today, Android commands 70% of the global smartphone market, and even more outside the US, which remains Apple's stronghold.

Or what about tablets? Remember how people said that they were different, and that Android would never beat Apple's hugely popular iPad etc etc? And yet today, as many of us predicted, Android tablets are recapitulating the smartphone story:

Smaller, cheaper Android tablets will nibble away at the iPad's market share this year. IDC on Tuesday revised its forecasts for the tablet market through 2013, which it now believes will climb to 190.9 million total units shipped. By the end of the year, IDC predicts that more Android tablets will be shipped than iPads for the first time since the iPad's 2010 debut.

IDC altered its numbers due to consumer purchasing behavior during the last quarter of 2012, during which it saw a surge in purchases of smaller tablets.

Smartphones and tablets are arguably the two most important computer sectors at the moment, because they are both spearheading a move away from the traditional desktop, dominated by Microsoft. That company's dreadful showing in both mobile and tablets is a further confirmation that this is a time of transition, when dominance is passing from Microsoft, presumably to Google.

But of course, things are never that simple. At the very moment that most people are admitting that Android has won, we are also seeing signs that victory may be slipping through its fingers. One of the clearest manifestations of that is the rise of Samsung as a smartphone manufacturer.

Even though the recent launch of the Samsung Galaxy S4 received rather mixed reviews, there was no doubt that it was a media event comparable to the launch of a new Apple iPhone (some might argue that's not a good thing...) And Samsung's product line is far deeper than Apple's: it offers over 70 different Android models, and represents around 42% of all shipments in that sector.

But the stronger Samsung gets, the less it will regard itself as part of the larger Android ecosystem. Indeed, it will be keen to differentiate itself from rival handset manufacturers, and one obvious way to do that is to slather proprietary layers on top of the underlying operating system. Once that happens, herd instinct will probably cause the others to follow suit – each trying to out-do the other in terms of the gaudy interface it puts in front of the user and the apps that are bundled, until the Android-ness of the smartphone is more nominal than real.

And it's not just the big names who will be driving Android fragmentation. Although largely invisible here in the West, Android use in China has been increasing even more rapidly than elsewhere: it has already recently achieved an amazing 90% market share of the smartphone market there.

Interestingly, its hold in urban areas is lower – only around 70% – which implies it's well over 90% elsewhere. That's because few outside the main cities can afford high-end iPhones, and most opt for low-cost Androids instead. Those are the real game-changers not just for China, but for the world. This report explains the background:

...last year large chip makers, including the Taiwan-based MediaTek and Spreadtrum, started offering “turn-key” systems: phone designs plus a set of chips with Android and other software preloaded. Spreadtrum says it may sell 100 million units this year.

Each chipset costs $5 to $10, depending on the size of a phone’s screen and other features. In total, Liang says, his cost to make a smartphone is about $40. He says he can manufacture as many as 30,000 smartphones a day for brands such as Konka Mobile and for telecom operators like China Unicom.